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Newsletter: Planning for Failure

Dec 1, 2009 5:21:00 AM / by Tim McCarthy

Writing good business plans is a key to success, but good plans must accommodate searching and failing over time to be effective.  Said differently, no plan is perfect – nor should it be. [more]

2009’s last The Business of Good Forum at the Fisher College of Business this past week was terrific – and taught me something very important to remember in our work in social business. Our speaker was Dr. Sharon Alvarez, Associate Professor of Entrepreneurship at the school, who has been studying and working in the social enterprise field for some years. Importantly, she was able to speak both as an academic and a practitioner.

Early in her presentation, Sharon referenced William Easterly’s seminal work White Man’s Burden. The fundamental concept of the book is that the US has had good intentions to aid world poverty but little impact. From 1955 to 2005, more than $2.3 trillion was spent in foreign aid with very unsatisfactory results.

The problem, says Easterly (and Dr. Alvarez), is too much “planning” and too little “searching.” Planners “know the answers” and plan based on their own knowledge and experience. Searchers instead assume poverty is an overwhelming issue complicated by such things as local cultures and corrupt governments and therefore look for answers before planning.

In fact, Dr. Alvarez said what she’s learned from studying then applying social business concepts is that the popular word “sustainability” may be one of the things getting in our way.

The planners in us expect we can go into an area unknown to us, give the people some ideas and some methods that have worked for us and then they will become sustainable.

“Sustainability suggests that we plan to get it right, then move on,” says Alvarez, “but isn’t failure a basic premise of entrepreneurial success?”

This set the tone for Sharon’s presentation and the dialogue afterward.

With fellow professor, Jay Barney, Sharon teaches an MBA course on social entrepreneurism. The course includes work “on the ground” as she calls it. The last two years, the professors and class worked in Bolivia.

And the MBA business class is learning how complicated things can get.

After the first trip in 2008, they formed a company named IDC – International Development Cooperative - which still exists. (In fact, their website www.idcvillage.org is very cool and you can even see and buy the products described below.)

The corporation came to life because in developing business options they found that the Bolivian women they visited could make beautiful scarves out of a local abundant raw material – fine alpaca wool. After some study, they came up with a plan to produce scarlet and gray (Ohio State’s colors) branded alpaca scarves and hats with the OSU logo on them.

Within a year, they had promoted the idea pretty successfully, working through the intricacies of getting the school’s marketing endorsement and clearances, creating local distribution for sales on campus and much more. The class and corporation have succeeded in identifying and developing a market for the scarves and a hat. Further, as you can see on their website, they’ve done a fine job promoting it – you can even buy the products online.

“But what about,” Alvarez asked, “the production and distribution back in Bolivia?”

She brought us back to her punch line of “sustainable failure” with the following little story.

Recently, as orders built up, the company received some less than perfect products. Upon contacting the“production manager” in Bolivia, the class and corporation found that difference between “planning” and “searching”.

The sales folks here were saying, “We can’t sell these!”

The production manager there was saying, “These are the best we can do this time, can’t you just sell them for less money?”

And that brought Sharon’s point home brilliantly. That is, that they don’t understand our consumer driven culture any more than we understand their work/business culture.

A small village in Bolivia (or India or Africa) isn’t only thousands of miles away geographically - it’s thousands of miles away mentally.

We can’t just apply our business understanding to their small businesses and expect it to work right away.

My dear friend, Joe Cistone, can probably tell 80 stories like this because that’s how many international projects they serve. He’s taught me, and I’ve witnessed, that things never work the way you plan them in such distant venues. You must just keep searching for new ways to take two steps forward, then one step back as you move forward.

To Sharon and Joe, sustainability is the goal but failure must not only be an option, it is required to grow.

We can’t just plan our way toward the abundant world this should be – we must search and fail together, over and over as we make progress in this noble cause.

Tags: Newsletter, Planning, Social Business, Sustainability, Failing

Tim McCarthy

Written by Tim McCarthy

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